You Should Invest Like a Girl

By Sophia Bera

NEW YORK (AdviceIQ) -- Men traditionally dominate the financial world, but women are actually better investors. Women are less impulsive and stick to a plan. Some male investors should take notice.

Research sketches out how women differ from men when it comes to investing. According to a study by Barclays Wealth and Ledbury Research in 2011, women do indeed make more money in the stock market. We tend to take fewer risks, do more research before we invest and follow a buy-and-hold strategy.

Over the past few months playing free Texas Hold'em at a local bar, I also noticed a parallel to investing: The tendencies that make women better investors make us better poker players, too. It's no wonder that Loni Harwood, a female with a major in finance, won a gold bracelet at this year's World Series of Poker.

Women are more risk averse and less impulsive. "Women spend more time researching their investment choices, tend to take less risk than men do and hold onto their investments longer," says LouAnn Lofton, author of Warren Buffett Invests Like a Girl -- And Why You Should, Too. "Women are also more likely to seek out information that challenges their assumptions."

In my completely unscientific observations, this translates to the poker tables too. I didn't notice this right away, though. George, who administers the card game I attend, pointed it out to me.

George told me that men always outnumber the women poker players, just as they do in the financial world. At this particular bar, it's usually about 80% men and 20% women at the start of the game, but at the final table it's usually more even as the men eliminate each other. This actually echoes the Barclays study, which said women often delegate financial matters to their husbands, even though females are statistically more successful in the long run.

Confidence or over-confidence. People tell me that I'm a better Texas Hold'em player than my husband, Jake, because I make it to the final table more often than he does. We play completely differently. Jake is much more aggressive. He likes to raise his wager, makes huge bets when he has a good hand and is more likely to win big or lose big.

I am a much tighter player. I fold a lot of hands and I play only cards I feel confident about. When I'm in a hand, I think of all the combinations that could beat me, and I usually assume one of the other players has a better hand than mine. I am more likely to lose a hand to a flush when I have a straight. Jake often loses to a straight when he has a pocket pair.

Patience is a virtue. Jake has a "go big or go home" mentality when it comes to poker, and my goal is to make it to the final table. I know that if I play conservatively, most of the dudes knock each other out before the night is over.

How does this relate to investing? Men are much more likely to chase hot stocks because they want the big win. They want to brag to their neighbors that they bought Apple ( AAPL) when it was at $20 a share.

Patience is important in investing, as well. I notice that my female clients tend be more interested in long-term growth rather than chasing the next big win. Women are more guided by a plan and are more likely to stick with it. This patience usually pays off in time.

Warren Buffett, perhaps the most successful investor of the past century, takes a more "female" approach. Buffett doesn't take foolhardy risks on hunches. He makes prudent investments for the long haul based on the research of many talented analysts. He doesn't plunk down money in investments that he doesn't understand.

This means that he missed out on the big run-up in gold prices, one of the hottest investments of the past few years. But Buffett is perennially No. 1 or No. 2 on the Forbes 400 list of America's richest people. You can't say the same for speculators in gold or anything else.

Regardless of gender, you should invest for the long haul, not chase hot stocks and have a plan. Find a financial adviser who does comprehensive financial planning above and beyond investment allocation. Investing is only one piece, not the whole pie. Once you have an asset allocation that meets your time horizon and risk tolerance, make sure you or your advisor rebalance your portfolio each year.

-- By Sophia Bera, CFP, a fee-only financial planner that caters investors in their 20s and 30s. She has been in the financial planning industry since 2007 and is the founder of Gen Y Planning in Minneapolis. She works with clients throughout the U.S. She has been quoted on websites and publications including Forbes, Business Insider, AOL, Yahoo, Money Magazine, The Fiscal Times, Fox Business and The Huffington Post. Money Under 30 recently named her one of the "Top Financial Advisers for Millennials."

AdviceIQ is a network of financial advisors that writes insightful articles for the public about investing and wealth management. All articles are edited by AdviceIQ's editor in chief, Larry Light. AdviceIQ certifies that all its advisors have no regulatory infractions.

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AdviceIQ is a network of financial advisors that writes insightful articles for the public about investing and wealth management. All articles are edited by AdviceIQ's editor in chief, Larry Light. AdviceIQ certifies that all its advisors have no regulatory infractions.

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